‘Bank bonus tax could hurt City’
December 18, 2009 at 4:04 pm
The new one-off tax on city bankers’ bonuses that was confirmed by Chancellor Alistair Darling in the pre-Budget report has led to criticism from the industry. Although complaints were sure to follow such a controversial decision, the main fear surrounding the tax is that it could be the start of a series of one-off taxations on bonuses that would end up with the best bankers moving abroad to work.
The new one-off tax will consist of a 50% levy on city bonuses over £25,000. It is being seen as a way to quell public anger over the role that bankers had to play in the recent financial crisis. However, experts and city analysts suggest that the move could in fact do more harm than good for the country as a whole, as it could lead to an exodus of talent.
It has been widely suggested that a number of banks might try to get around the tax by holding off from paying bonuses until 2010. But the government will put a number of anti-avoidance measures into place to stop bankers from skipping the tax, including through temporary salary increases.
If London sees an exodus of the big global banks that have made The City their base of choice in Europe, it will be far worse for the government in the long term. The bankers, however, will not suffer and will instead just leave to find more welcoming shores.
Now Gordon Brown is trying to get support from other countries to introduce similar measures so that the UK is not on its own. So far France has already announced that it could introduce similar measures which could help to prevent the exodus that is being predicted.
‘Government plans Post Office Bank’
December 11, 2009 at 11:13 am
With all the problems to hit the banking sector recently it is no surprise that the government is looking for ways to improve the way that UK citizens get access to their accounts. Its latest idea is to launch a new Post Office Bank that would provide access to bank accounts in all of its 11,500 branches. This equates to more branches than all of the other High-street banks combined.
The plans are only in their infancy, and a public consultation will first go ahead to decide on its feasibility. If it is to go ahead then it has been predicted that it will require investment of up to £1.7 billion by 2011.
The Post Office Bank would provide customers with a number of features to enhance the banking experience. One of the main things that it will provide is access to current accounts at all branches of the Post Office. It will also provide mortgages, business accounts and children’s savings accounts, making it quite a comprehensive service.
Leaflets are currently being handed out in branches across the country over the next three months to provide more information, and they are also asking for feedback from the public. If it all goes to plan then the Post Office could start to introduce banking services as early as next year.
However, there have been concerns expressed over aspects of the plan. It has already been questioned just how well the Post Office will be able to cope with even more customers. Some have also raised concerns over how well trained the staff are to advise customers on their finances.
‘Abbey launching no-fee current account’
December 4, 2009 at 4:13 pm
Abbey has announced that it is launching a current account that will not charge any overdraft fees. This announcement came just days before Abbey and other banks went to court over a case that would decide whether they had to pay back millions in such fees to customers. In the end the court ruled in favour of the banks.
The Santander Zero Current Account will not charge any fees for bounced cheques, unpaid direct debits or overseas withdrawals. It also has low overdraft rates and will pay 6% interest on credit balances for the first year. The only catch is that it is only available for customers who have a mortgage with Abbey because the bank is trying to switch more of these customers over to its current account service.
The current account will be made available from January 11, 2010, and its launch is set to coincide with Abbey’s name change to Santander. Mortgage customers at Bradford & Bingley will also be able to open the account, and Alliance & Leicester mortgage customers will be eligible from summer 2010.
Together, the Santander group has a 13.5% share of the UK mortgage market with 2 million customers. But only 400,000 of these also hold a current account and it is hoping to change this.
The chief executive of Santander UK, Antonio Horta-Osorio, said that the group is “uniquely placed” to change the approach to current accounts. The head of banking at moneysupermarket.com, Kevin Mountford, said that the group had “taken heed of broad concerns” in the way that charges are applied to current accounts, and that this could lead to a change in the way banks operate in the future.
Find more details about the current account at the Abbey website here.
